Posted on September 29, 2007

Nonprofits Post Moderate Revenue Growth During the Second Quarter of 2007

The latest edition of the Index of National Fundraising Performance from the Target Analysis Group finds that revenue-per-donor increases combined with continuing decreases in the number of donors resulted in modest median revenue growth of 2.1 percent during the first half of 2007 compared to the same period a year ago.

Donor declines were particularly significant in the area of new donor acquisition — in part because the Indian Ocean tsunami of December 2004 and the Gulf Coast hurricanes of 2005 generated unprecedented levels of charitable giving and created a noticeable increase in median revenue for 2005. Revenue and donor numbers then declined throughout 2006 as organizations experienced a correction from the disaster-related increase. The recent gains in revenue per donor, however, have compensated for losses in donor populations.

The only areas that showed increases in new donors in the latest index were international relief and animal welfare — both of which recovered from a slow post-disaster period the year before. The gradual long-term decline in donor population is likely due to a mix of factors, including a shifting generational profile in the United States and a change in focus by fundraisers toward higher-dollar donors. Indeed, upper-income donors have increased recently as a proportion of total donors, but it is unclear whether this is due to strategic changes or is a natural inflationary shift. If current trends continue, at some point giving amount increases alone may not sustain overall revenue growth.

"The target index has shown flat to moderate revenue growth in the first two quarters of 2007," said Rob Harris, vice president of Analytic Products at Target Analysis Group. "This indicates to us that revenue is now stabilizing at levels of growth that were typical before the 2005 disasters."